Vedantu – EdTech founders Win ET Startup Award

Vedantu company is the second most valued ed-tech start-up in India following its USD 100mn fund raise at a valuation of USD 600mn during a Series D round led by Coatue Management, Tiger Global, GGV Capital, Omidyar and Westbridge Capital. Its founders Vamsi Krishna, Pulkit Jain and Anand Prakash won the ET Startup Award for 2020 under the Category – Come Back Kids.

Interestingly, the Vedantu’s valuation has more than doubled in just three months, as it had earlier raised USD 7mn from KB Global at a valuation of USD 280mn in April 2020. We believe the latest fund raise comes under the backdrop of the fast growing adoption of the online medium for learning purposes in the country that was visible even prior to the onset of the Covid-19 pandemic. The pandemic has further intensified the online shift, with all leading players such as Byju’s, Unacademy and Whitehat Jr reporting strong growth in user base in the last few months.

The monetization potential of the ed-tech industry is also very high due to 1) Preference of Indian parents to subscribe their children to high quality education even if it meant spending those extra bucks in order to secure their future and the commonly held belief that the offline education system in the country has not been able to adapt to changing educational needs. Accordingly, strong investor interest in Vedantu can also be attributed to the robust monthly increase of around 20,000 paying subscribers that the company witnessed in each of the month since the lockdown began, compared to a user base of just 50,000 at the end of the last year.

Despite the recent spurt, the online education system in India still continues to remain vastly under penetrated. Moreover, even if the offline education channels were to open now, a sizeable section of students (parents) are likely to continue to prefer the online education channel given the pandemic related fears such as safety and hygiene. We therefore expect the recent high growth trends to sustain for the ed-tech industry in the near to medium, that in turn will likely lead to strong investor interest in leading ed-tech start-ups.